MIT Sloan Management Review Article on Small Stake, Big Voice

  • 14m
  • James Bamford, Lois Fernandes D'Costa, Tracy Branding Pyle
  • MIT Sloan Management Review
  • 2021

Taking a minority stake in a joint venture (JV) can make good business sense. What doesn’t make sense is ceding more control than you have to. With the post-pandemic surge in partnerships, including those with unequal ownership, executives negotiating the deals should understand that they may hold more cards than they realize.

Nearly half of the world’s largest JVs have a minority partner — that is, an owner with an equity interest below 50%.1 Companies may take minority stakes simply due to comparative asymmetries in their contributions of cash and assets to the venture or because they’re selling a majority stake in a previously wholly owned business as the first step in a staged exit. They may want to test the waters before fully committing to a new geography or business, or local regulations may prevent them from having a controlling stake. Regardless of the reason, minority partners often seem to hold an enviable position: They invest less money, have lower reputational risk, and can lean on a majority partner to do much of the heavy lifting.

About the Author

Lois Fernandes D’Costa is a director, Tracy Branding Pyle is a managing director, and James Bamford is a senior managing director at Ankura.

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  • MIT Sloan Management Review Article on Small Stake, Big Voice